Startup funding in India statistics & facts

India’s startup landscape has been slowly coming of age with innovative and entrepreneurial ideas. As the startup numbers burgeoned in recent years, so did the need for bigger investors and funding options. While accelerators and startup incubators have been blazing a trail through the startup ecosystem in the country, it is the venture capitalists and private equity holders who are most sought after.

From retail to transport, startups across the country have brought innovation and disruption to their sectors, changing the way investors look at small businesses and entrepreneurships. Third to the United States and China in global rankings, India recorded 21 unicorn enterprises in early 2020. Digital payments saw the largest boost in the country over the last few years. Furthermore, online retail made it big with Walmart’s acquisition of Flipkart, the world’s biggest e-commerce deal, impacting not just the segment, but also its competitors and customers. Other companies in the spotlight were OYO, Zomato, Swiggy, Udaan. India also houses BYJU’s, which was the most valued edtech company worldwide.

In terms of investments, Japanese giant Softbank led the funding race with over - eight billion U.S. dollars invested in India since 2014, as it aims for a whopping 100-billion-dollar vision fund. Over five billion dollars of funding also came from Chinese companies Alibaba, Tencent, T.R. Capital and Hillhouse Capital between 2015 and 2019. Other investors include American company Sequoia. This was despite the fact that FDI inflows into the country were of the largest value from Singapore, with Japan and China far behind. The sectors benefitting from these were primarily financial services and technology, along with telecom and automotive.

The surge in private equity and venture capital funding for new enterprises had been immense within the last decade. The reasons for this include an increasing number of foreign investors and a startup friendly political environment in the government’s policies. This growth in investment was likely to be impacted by the onslaught of the coronavirus (COVID-19) pandemic and consequent lockdown in 2020, causing widespread disruptions within the ecosystem.

Nine in ten startups showed declining revenues, while a third halted operations in May 2020. Early and mid-stage businesses were most affected, a majority of which were B2C enterprises. A small share reported cash reserves that would last over nine months despite the government’s efforts of collaborations to offer continued support through the pandemic. Of these, the worst hit belonged to the fintech, healthcare, and retail sectors. On the bright side, artificial intelligence was expected to see a boost in spite of the times. With larger companies stepping in for support, and central and state governments easing policies, it remains to be seen how startups will survive this unprecedented year.

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Startup funding in India

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